What a year 2018 has been for the Aussie business community. Let's take a look back at the biggest stories, the highs and the lows, from the last year.
Business never stops, and neither does the news, and there was plenty of it throughout the year. While My Business has already listed the 10 most-read stories of 2018, there were plenty more stories that unfolded throughout the year, from retail collapses to social media and of course an endless stream of regulatory changes and red tape hurdles.
Regular updates, such as the monthly interest rates verdict of the Reserve Bank of Australia and tax guidance and clarifications from the ATO, are also popular as business leaders attempt to keep track of their financial comings and goings.
Here is a look at some of the major events, the biggest news and the most commented issues that impacted Australian businesses during the year.
It was anything but a quiet start to 2018, with Facebook dropping the bombshell that it planned to overhaul its algorithms to effectively remove business posts that were not paid for. The move prompted both surprise and alarm among the SME community, with many companies heavily reliant on the social media giant to attract and engage with customers.
Later in the year, News Corp Australia admitted the change had delivered a material impact on its readership, while businesses increasingly shunned Facebook in favour of Instagram and LinkedIn.
It came as Twitter fell out of favour with businesses too, with many seeming to abandon the platform as engagement dwindled.
Some bold predictions for house prices and interest rates for the new year were also front of mind as the Sydney and Melbourne property markets came off the boil, but the severity of the downturn (which is continuing into 2019) caught many off guard.
But as My Business pointed out towards years’ end, the headlines of doom and gloom about property have been somewhat misleading, given that not all Australian property markets are seeing values heading south.
Phoenix activity was also a hot topic in January and continued throughout the year, with business leaders keen to see who had been caught doing the wrong thing by their suppliers and creditors, but also consistently blasting the apparent leniency of the punishments handed down.
One of the most noteworthy examples was a father and son duo banned as directors after the failure of five companies under their control.
January also marked the start of same-sex weddings in Australia, which the wedding industry hoped would deliver a sizeable sales boost. Towards year’s end, the ABS revealed just how many same-sex couples had tied the knot, and where in Australia the majority of those nuptials had taken place.
A popular Fringe Benefits Tax loophole came into the spotlight in the shortest month of the year, as the Tax Office cracked down on business vehicles being used for personal travel.
The ATO later clarified its position on FBT claims, and also issued a pre-Christmas edict on how the tax is treated for Christmas parties and gifts, which only served to highlight the complexities surrounding the tax.
The franchise sector also hit the headlines this month, as one of Australia’s largest franchise operators, Retail Food Group (RFG), hit turbulent times. A number of franchisees of brands including Gloria Jean’s Coffees and Brumby’s Bakery launched a class action, alleging significant disclosure failures.
Within weeks, RFG embarked on a major store closure program in a bid to cut operating costs, as write-downs on the value of its brands pushed the listed group into an $87.8 million loss for the year – despite an almost 21 per cent surge in revenue.
Also big news for the month was an issue My Business stumbled across relating to employee sick leave, and the technicalities of what it does and does not cover.
Billionaire James Packer, son of the once richest person in Australia Kerry Packer, shocked the country by announcing he would quit his directorships in a bid to focus on his mental health.
The brave announcement triggered an outpouring of support for Mr Packer, and shone a light onto the pressures of leading a business and how it can impact a person’s mental health and overall wellbeing.
Business owners were also interested to learn the reasons behind Vegemite’s decision to sever ties with one of its service providers after a 74-year partnership. Months later, a similar parting of the ways saw automaker Ford opt for a new advertising agency, saying goodbye to the firm it had used for 75 years.
April saw major headaches begin for food delivery companies, with My Business revealing smaller restaurants may have been pushed into unfair contracts with Uber Eats. That triggered a formal investigation into Uber Eats by the competition watchdog, which is understood to be ongoing.
Local government and its impacts on small businesses also attracted big attention, after the Gold Coast Commonwealth Games led to substantial drops in foot traffic for local businesses. South of the border, the City of Sydney and NSW government were embroiled in a stoush over reimbursing businesses affected by the delayed light rail project in the city’s CBD and inner suburbs, with no clear resolution in sight.
There was also news from the ATO that it had secured a 10-year jail term for the instigators of what it described as Australia’s largest ever tax fraud, and the bizarre case of a flatulent manager cleared by a court of workplace bullying.
But the most-read story of April was the news that the Australian restaurant chain of British celebrity chef Jamie Oliver had gone belly up.
May 2018 was a record-breaker for My Business in terms of readership volumes, driven largely by huge interest in the banking royal commission and its hearings into SME lending, with live rolling coverage of the testimony of business customers, bankers and the regulators responsible for overseeing them.
The hearings unearthed shocking examples of conduct which fell well below community expectations, breached the banking code of conduct and, in several instances, may have broken the law.
Some of the most noteworthy sources of community outrage against the banks included the allegations that:
- NAB had unlawfully seized the proceeds of the sale of a customer’s home to pay separate business debts
- Bankwest had bullied multiple business customers into bankruptcy
- Receivers had contributed to the losses incurred by a failed developer by undertaking unnecessary renovations on a brand new property
- Bank of Melbourne seized $100,000 in funds from a business customer to cover its own mistake
- CBA ignored customer complaints about overcharging, and only acting when one customer threatened to speak to the media
- Westpac threatened to make a disabled elderly woman homeless by seizing her home after she had been inappropriately accepted as a guarantor over her daughter’s business loan
The final report from the commission is due in early 2019.
May also saw one of Australia’s biggest corporate collapses of the year, as Toys 'R' Us went into liquidation. Just two months earlier, the Australian arm of the toy retailer had denied rumours that it was in trouble after the US division went under, but a staff member revealed to My Business at the time that such public denials didn’t reflect the concerns held internally.
And of course the annual federal budget was handed down by then-Treasurer Scott Morrison, which revealed another year’s extension to the $20,000 instant asset write-off, substantial changes to the R&D incentive and a crackdown on tax evasion and the “black economy”, including undeclared cash payments.
Tax matters always rear their head in June and July as the financial year ticks over, and this one was no exception. Of biggest concern to SMEs was the ATO’s revelation that it would be launching its biggest ever “education campaign” about tax deductions, designed to increase compliance and reduce the number of mistakes or deliberate withholdings taking place.
It came at the same time that a Senate committee was told the Tax Office should be split into two separate entities to break up its power as judge, jury and executioner in one. The hearing was prompted by allegations that the Tax Office had deliberately targeted and bullied small businesses because they were easy targets, moves that were described as “killing small business”. The ATO denied the allegations.
Subsequently the federal opposition unveiled plans to shake-up the ATO’s appeals processes should it win the next election.
Also this month, the new minimum wage was unveiled, with employers taken aback at the size of the increase despite inflation weighed down at or below the Reserve Bank’s 2 to 3 per cent target.
While businesses were hunkered down over tax season, the issue of trust – and also broken trust – emerged at the forefront of the news domain.
It was revealed that a WA woman was given a 12-month suspended jail sentence for failing to lodge 91 separate BAS and income tax returns to the ATO.
Businesses were also left aghast at a Fair Work Commission ruling that deemed a dismissal had been unfair despite the business stating performance warnings had been issued. Some My Business readers claimed the decision highlighted the one-sidedness of the Fair Work Act against employers. But others suggested the decision was justifiable because of the particular circumstances of the case, including that any warnings had not been properly documented in writing.
Meanwhile, a separate story explored the rules around how, when and even if monitoring of employees in the workplace is legal, with a workplace relations firm detailing some of the many instances of theft by employees it has encountered among its clients.
On a more positive note was a ranking of Australia’s most trusted major brands, which included two banks – despite the ongoing banking royal commission – and two supermarkets. It is interesting to note, however, that the brand deemed Australia’s most trusted was not actually Australian owned.
Also in July came the news that fast food retailer SumoSalad had called in the administrators. Despite the usual connotations of immediate collapse, though, its co-founder said the move was actually a positive for the company, as it sought to restructure under administration in order to embark on a new growth phase.
And then came August, and with it yet another Australian prime minister – the sixth since John Howard and his government were defeated in the 2007 election. It came after a political coup by Immigration Minister Peter Dutton brought Malcolm Turnbull’s leadership to an end, but neither the incumbent nor the challenger winning in the end as Treasurer Scott Morrison walked away the ultimate victor of the party ballot.
The government is still suffering as a result of the publicly unpopular leadership turmoil, as it drags in the opinion polls leading into the 2019 election and disquiet among its ranks, plus the loss of Mr Turnbull’s seat, evaporated its majority in the House of Representatives.
Yet it was something with much more tangible and direct impacts on employers that dominated business news: industrial relations. A shock court ruling threw up uncertainties as to what constitutes a casual employee, and with it their right to claim leave entitlements. Another separate case questioned what constituted “days” when calculating sick leave provisions.
Highlighting the complexity of Australia’s industrial relations laws, international food delivery company Foodora announced that it would quit Australia after becoming embroiled in legal action over employment laws with the Fair Work Ombudsman.
August also saw the start of unpaid domestic violence leave for all Australian employees.
The issue of casual employees continued to make waves in September, with one business lobby claiming the ruling had the potential to cost employers billions if they were required to backpay ‘casual’ employees who had been miscategorised.
Employers also vented frustration and even panic that the ruling potentially meant employees could double dip on entitlements, by claiming leave provisions while also pocketing casual loading.
The government has since intervened in one ongoing court case in a bid to clarify the law around casual employment, while also amending legislation to limit backpay should such a finding (that a casual employee was not actually casual by means of the regularity of their hours and terms of employment) be repeated in court in future.
Despite his very public reluctance to hold the banking royal commission, Scott Morrison, in one of his first moves as prime minister, launched a new royal commission, this time into the aged care sector. The announcement was cautiously welcomed by the industry, with hopes it would lead to an overhaul of funding and improved patient care.
And My Business hosted its very first live webcast (stay tuned for future webcasts!), exploring the digitisation of business processes, digital signatures and going paperless. It spurred a flurry of questions from business leaders about digitisation, which My Business sought to answer post-event.
Business collapses continued to plague the retail sector, with menswear retailer Roger David and chocolate café chain Max Brenner both going under in October, followed by the Australian arm of womenswear and homewares Laura Ashley just prior to Christmas.
Elsewhere it was revealed that the personal information of 9.1 million airline passengers had been exposed after a major cyber breach hit Cathay Pacific, and as many as 50 million more people worldwide had their Facebook accounts hit in a targeted attack on the social network.
A property company also sparked a flood of complaints from businesses about the NBN after claiming the national infrastructure project was not “fit for commercial purpose”. The comments blew up on a Reddit feed, eliciting hundreds of responses criticising the rollout and the government’s management of the process.
Yet while some of those comments claiming that the switchover to the NBN had put regional Australia at a disadvantage over metropolitan areas, the ACCC’s investigation of internet speeds found no material difference between the speeds being achieved in urban and regional areas.
Public debate also erupted in the latter part of the year about religious schools and their exemption from anti-discrimination laws, which afford them the right to expel LGBT teachers and students from their ranks. The debate spilled into the business world as the Anglican Diocese of Sydney banned businesses and organisations from leasing or using its commercial properties for certain activities, largely driven by the change in marriage laws to include same-sex couples.
The first of November marked a significant compliance milestone for businesses and employers around the country, including changes in penalty rates for the retail award, long service leave eligibility in Victoria as well as the official launch of the Australian Financial Complaints Authority (AFCA), replacing the Financial Ombudsman Service (FOS) and two other bodies.
Cyber security continued to be a hot-button issue in the final months of 2018. Among the high-profile incidents were:
- An extortion attempt hitting an Australian shipbuilding company
- Marriott International, owner of hotel brands including Sheraton, Westin, W and St. Regis, having its booking system hacked, potentially exposing the personal information of up to half a billion people worldwide
- A global attack against managed service providers unveiled in December that was labelled “a catalytic event” by the Australian Cyber Security Centre
The ATO also issued an urgent warning to businesses about email scams after a surge in the number of complaints, with one business alone duped out of more than $300,000.
Meanwhile My Business revealed that a staggering number of SMEs are actively curbing their own growth, in a direct attempt to reduce their exposure to complex and “unfair” workplace laws.
One reader went on to reveal in detail all of the many factors which are causing them to take the same approach. The comments struck a clear chord with My Business readers, with dozens commenting on the article or by email, most of whom concurring that they too were “downsizing” and applauding the reader for speaking out on the issue.
Also in November, search engine Google – often lauded as being one of the best places to work – suffered strike action, with workers in offices around the world, including in Australia, walking off the job in protest against the company’s perceived toleration of sexual misconduct by a senior figure. The claims were strenuously denied by the manager involved. Google issued only a brief statement acknowledging the dispute and stating that it was “taking in all [our employees’] feedback so we can turn these ideas into action.”
Another global company, Tesla, also made headlines, after its billionaire founder Elon Musk revealed that his tech giant Tesla came within weeks of collapse as cash flow constraints weighed heavily during production of its new vehicle model.
Closer to home, some 800 people from around Australia congregated on The Star in Sydney for the 2018 Optus My Business Awards. The black-tie event acknowledged the best and brightest among the country’s SME community, with plenty of tales of overcoming phenomenal odds to achieve amazing things in business and in life.
One of the standouts was newly crowned Businesswoman of the Year Jo Burston, of Inspiring Rare Birds, who had the entire ballroom on its feet in support of female entrepreneurship. Ms Burston later applauded the government’s launch of a Future Female Entrepreneurs fund, telling My Business that it was “taxpayer dollars well spent” in encouraging schoolgirls and young women to look at business as a potential career path and unlock skills, talent and innovation for the betterment of Australia as a whole.
The issue of gender equality, or a lack thereof, came amid major debate about the lack of women within the federal government’s ranks, while ABS figures showed inequality is also ingrained in the corporate world where just one in six CEOs are female.
News that as many as 5,000 Aussie accountants owe money to the Tax Office, either privately or as part of their business, prompted concerns that they may be opening up their clients to the risk of an audit. Professor Robert Deutsch of The Tax Institute said he was not aware of any direct correlation between an accountant’s own tax affairs and those of their clients, yet the ATO subsequently told My Business that it is possible for audits to be carried out on businesses because of their tax agent’s activities.
Audits were in the spotlight separately after AirTasker revealed it had been hit with demands to repay R&D Incentive funds, after reports that the tech sector could collectively be hit for millions of dollars.
Also rounding out the year came the news that technology company Appster had gone into liquidation, with suggestions that business clients had been left in limbo about unfinished projects. Others in the industry blamed the collapse on Appster’s fixed-price model, and warned business leaders against taking on software and digital developers under such an arrangement.
Just as most people were breaking for Christmas, it was revealed that a sizeable family business had sued its accounting firm for almost $5.5 million for making, and then concealing, an administrative error that is costing it $660,000 each year over the length of a 15-year government tender.
Looking back, it’s clear that 2018 was a big year for the business community. And with plenty of these issues still bubbling away, mixed with a potentially diabolical federal election, 2019 is unlikely to be any less quiet.
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